Sprint, Softbank, Clearwire Merger Clears Hurdle, but Challenges Loom
NEWS ANALYSIS: Softbank and Sprint face financial and technology challenges going forward, but Sprint is poised to make a huge move in the wireless business.Clearwire's minority shareholders have approved the final step in the merger between Sprint Nextel and Softbank, Japan's third-largest mobile carrier. The merger is expected to close Wednesday, July 10, after the markets in the U.S. shut down for the day. The agreement finishes what had turned out to be the diciest part of the complicated merger between the U.S.-based Sprint and the Japan-based Softbank. However, the merged companies face financial and technological challenges going forward. They must find the resources to build out a vast nationwide Long Term Evolution (LTE) network. The companies must also find ways to attract customers in the face of fierce price competition and do it all with financial resources that are more limited than either company had originally anticipated. The merger was more complex and more expensive than first expected because of the late entry by Dish Networks, which made a last-minute bid to acquire both Sprint and Clearwire in separate transactions. Dish eventually withdrew after Sprint raised its offer for Clearwire to $5 per share.
While Sprint already held a majority of Clearwire's stock, the merger required that a majority of shareholders not affiliated with Sprint approve the action. Approximately 95 percent of the outstanding shares of Clearwire stock were voted in favor of the merger. The companies expect to close the deal between Sprint and Clearwire on July 9, the day before Sprint and Softbank close their deal.